very OT and long: Tax Breaks

I found this nearly two years ago in a little magazine called "Prairie
Times", and kept it around for election time. With all the rhetoric
being fired by both sides, I thought this might be an appropriate time
to post it.

Whether or not you agree with what the man has to say, it's something to
think about.

The author is:
T. Davies
Professor of Accounting and Business Law
The University of South Dakota School of Business

I quote:

HOW TAXES WORK

Let's put tax cuts in terms everyone can understand. Suppose that every
day, ten men go out for dinner. The bill for all ten comes to $100. If
they paid their bill the way we pay our taxes, it would go something
like this:

The first four men (the poorest) would pay nothing:
The fifth would ay $1:
the sixth would pay $3:
The seventh $7:
The eighth $12:
the ninth $18:
and the tenth man (the richest) would pay $59.

The ten men ate dinner in the restaurant every day and seemed quite
happy with the arrangement until one day, the owner threw them a curve
(in tax language, a Tax Cut).

"Since you are all such good customers," he said, "I'm going to reduce
the cost of your daily meal by $20. So now, dinner will only cost
$80,00.

The group still wanted to pay their bill the way we pay our taxes.

The first four men were unaffected. They would still eat for free.

But what about the other six-the paying customers? How could they divvy
up the $20 windfall so that everyone would get his fair share? The six
men realized that $20 divided by six is $3.33. but if they subtracted
that from everybody's share, then the fifth man (who was paying $1) and
the sixth man (who was paying $3) would up being PAID to eat their meal.

So the restaurant owner suggested that it would be fair to reduce each
man's bill by roughly the same percentage amount, and he proceeded to
work out the amounts each should pay.

And so the fifth man now paid nothing:
The sixth pitched in $2:
The seventh paid $5:
The eighth paid $9:
The ninth paid $12:
Leaving the tenth man with a bill of $52 instead of his earlier $59.

Each of the six was better off than before. And the first four continued
to eat for free. But once outside the restaurant, the men began to
compare their savings. "I only got a dollar out of the $20, declared the
sixth man, but he, (pointing to the tenth) got $7.00.

"Yeah, that's right," exclaimed the fifth man, "I only saved a dollar,
too. It's unfair that he got seven times more than me!"

"That's true!" shouted the seventh man, "Why should he get $7 back when
I got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get
anything at all. The system exploits the poor!"

So, the nine men surrounded the tenth and beat him up. The next night he
didn't show up for dinner, so the nine sat down and ate without him. But
when it came time to pay the bill, they discovered, a little late, what
was very important. The bill for dinner was still $80.00 and they were
now FIFTY-TWO DOLLARS short of paying the bill! Imagine that!

And that, boys and girls, journalists and college instructors, is how
the tax system works. The people who pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being
wealthy, and they just may not show up at the table any more. Where
would that leave the rest?

Unfortunately, most taxing authorities anywhere cannot seem to grasp
this rather straightforward logic!

end of quote.




chris c
I thank Thee first because I was never robbed before; second, because
although they took my purse they did not take my life; third, because
although they took my all, it was not much; and fourth because it was I
who was robbed, and not I who robbed. -Matthew Henry, minister
(1662-1714)

I really appreciated this. It is so well put!! I worked in the tax world for
over ten years, and it was so hard explaining things.

Did you notice that the response of the lower income guys in this example,
definitely examplified the "What's in it for me? " attitude. I may not be a
Democrat, but , by golly, John Kennedy nailed it when he did this speech
about "what I can do for my country". Unselfishness seems to be sadly
lacking these days.

Gillian
"C Cordell" wrote in message
...
I found this nearly two years ago in a little magazine called "Prairie
Times", and kept it around for election time. With all the rhetoric
being fired by both sides, I thought this might be an appropriate time
to post it.

Whether or not you agree with what the man has to say, it's something to
think about.

The author is:
T. Davies
Professor of Accounting and Business Law
The University of South Dakota School of Business

I quote:

HOW TAXES WORK

Let's put tax cuts in terms everyone can understand. Suppose that every
day, ten men go out for dinner. The bill for all ten comes to $100. If
they paid their bill the way we pay our taxes, it would go something
like this:

The first four men (the poorest) would pay nothing:
The fifth would ay $1:
the sixth would pay $3:
The seventh $7:
The eighth $12:
the ninth $18:
and the tenth man (the richest) would pay $59.

The ten men ate dinner in the restaurant every day and seemed quite
happy with the arrangement until one day, the owner threw them a curve
(in tax language, a Tax Cut).

"Since you are all such good customers," he said, "I'm going to reduce
the cost of your daily meal by $20. So now, dinner will only cost
$80,00.

The group still wanted to pay their bill the way we pay our taxes.

The first four men were unaffected. They would still eat for free.

But what about the other six-the paying customers? How could they divvy
up the $20 windfall so that everyone would get his fair share? The six
men realized that $20 divided by six is $3.33. but if they subtracted
that from everybody's share, then the fifth man (who was paying $1) and
the sixth man (who was paying $3) would up being PAID to eat their meal.

So the restaurant owner suggested that it would be fair to reduce each
man's bill by roughly the same percentage amount, and he proceeded to
work out the amounts each should pay.

And so the fifth man now paid nothing:
The sixth pitched in $2:
The seventh paid $5:
The eighth paid $9:
The ninth paid $12:
Leaving the tenth man with a bill of $52 instead of his earlier $59.

Each of the six was better off than before. And the first four continued
to eat for free. But once outside the restaurant, the men began to
compare their savings. "I only got a dollar out of the $20, declared the
sixth man, but he, (pointing to the tenth) got $7.00.

"Yeah, that's right," exclaimed the fifth man, "I only saved a dollar,
too. It's unfair that he got seven times more than me!"

"That's true!" shouted the seventh man, "Why should he get $7 back when
I got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get
anything at all. The system exploits the poor!"

So, the nine men surrounded the tenth and beat him up. The next night he
didn't show up for dinner, so the nine sat down and ate without him. But
when it came time to pay the bill, they discovered, a little late, what
was very important. The bill for dinner was still $80.00 and they were
now FIFTY-TWO DOLLARS short of paying the bill! Imagine that!

And that, boys and girls, journalists and college instructors, is how
the tax system works. The people who pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being
wealthy, and they just may not show up at the table any more. Where
would that leave the rest?

Unfortunately, most taxing authorities anywhere cannot seem to grasp
this rather straightforward logic!

end of quote.




chris c
I thank Thee first because I was never robbed before; second, because
although they took my purse they did not take my life; third, because
although they took my all, it was not much; and fourth because it was I
who was robbed, and not I who robbed. -Matthew Henry, minister
(1662-1714)

C Cordell wrote:
snip

HOW TAXES WORK

snip
And that, boys and girls, journalists and college instructors, is how
the tax system works. The people who pay the highest taxes get the
most benefit from a tax reduction. Tax them too much, attack them for
being wealthy, and they just may not show up at the table any more.
Where would that leave the rest?

Unfortunately, most taxing authorities anywhere cannot seem to grasp
this rather straightforward logic!

end of quote.

Unfortunately that's only part of how it works in the real world. In the
real world the other tables will eventually end up paying extra to make up
the $20 that the restaurant manager loses every day. Which means when prices
go up the 10 men will be back where they started. But they're still getting
a break so even though they're paying the same amount they used to they
should be happy right?

Think about it. When we get a federal 'tax cut', state taxes go up because
there's less federal aid coming in. If we get a state 'tax cut' local taxes
and property taxes go up because cities, towns, and schools aren't getting
as much state aid. Unless of course programs and services get cut to the
bone. There is no free (or reduced price) lunch for anyone. It's all smoke
and mirrors.
--
Jeri
"Change is inevitable, except from vending machines."
http://community.webshots.com/user/owlie47

Hi Chris

Cute story, but not very accurate.

What about the heaviest tax burden on the citizens, those imposed by
local and state governments, taxes that have no income or exchange of
money to offset those taxes?
These types of taxes HURT the poor and lower class people THE MOST!

If one ever sat down and compared the taxes paid by the poor and lower
class people based as a percentage of their total income, you will
quickly find that the poor are actually paying the highest percentage
of taxes and the wealthy the lowest percentage.

Although taxes are a necessary evil, taxes should ONLY be imposed
where money changes hands, either as income or when we spend it.
At least then the money exists to pay the taxes!

But what about the Billions who instead of squandering their money on
wine, women and song decided to buy something tangible that they could
keep and use? A house, a car, a lawn mower, a pet?
Well, they get retaxed every single year on those items, even if they
have NO INCOME to pay those taxes. If they cannot pay those taxes,
the government TAKES AWAY those items from them to cover the taxes.

The government wants you to buy something, use it up and buy again.
They don't want you to buy something that makes sense, or that will
last. So they tax these things in order to steal them away from you
after you retire, often when you need them the most.

These UNJUST taxes are hidden under tricky names, like Personal
Property Taxes, Wheel Taxes, Luxury Taxes, Pet Taxes, and the highest,
Real Estate Taxes and Assessments, etc.

Although there are some GOOD POINTS to some of these taxes, like
keeping your neighbor from having 18 derelict cars in his front yard,
for the majority of people on fixed incomes, often it means loosing
the only means of transportation they have, and sometimes even their
house as well.

For most elderly, their health insurance alone costs 300 to 600 per
month, property taxes in suburbia on their home 250 per month,
personal property taxes on their car vary depending upon the car, but
are often over 20 bucks a month. In some states, another 3 bucks per
month for their lawn mower, 2 bucks for their pet, etc.

On a fixed income of $500.00 per month, they don't have enough to pay
the taxes, much less buy food and essentials for living.

Taxes alone for my 80 year old mother are 82% of her fixed income, and
I'll bet they are very close to that percentage for your elderly
parents as well!

TTUL
Gary

Group: rec.crafts.textiles.needlework Date: Thu, Oct 7, 2004, 9:27am
(MDT+2) From: am
(Gary=A0V.=A0Deutschmann,=A0Sr.)

much snipping for brevity
What about the heaviest tax burden on the
citizens, those imposed by local and state

For most elderly, their health insurance alone
costs 300 to 600 per month, property taxes in
suburbia on their home 250 per month,
personal property taxes on their car vary
depending upon the car, but are often over 20
bucks a month. In some states, another 3
bucks per month for their lawn mower, 2
bucks for their pet, etc.

Taxes alone for my 80 year old mother are
82% of her fixed income, and I'll bet they are
very close to that percentage for your elderly
parents as well!

As a matter of fact, my elderly parents are long gone from the scene so
they don't have to worry about it.

None of the taxes you quote are that high here, so I don't either. My
health insurance is $120 per month, I just paid for a renewal of my car
license ysterday and the ownereship tax came to $3.45 a month, property
tax runs about $130 per month on half of a 320 acre farm, and I've never
heard of anybody being taxed for owning a lawn mower. Maybe your mother
should check into cheaper insurance, drive a smaller car or move to a
more reasonable area?

chris c

In article ,
am (Gary V. Deutschmann, Sr.) writes:

If one ever sat down and compared the taxes paid by the poor and lower
class people based as a percentage of their total income, you will
quickly find that the poor are actually paying the highest percentage
of taxes and the wealthy the lowest percentage.

Yep. A friend's husband got a raise and she started squawking about their
taxes going up to the next bracket. So I sat down with my receipts for the
year, sales taxes, utility taxes, property taxes, Social Security taxes
(self-employed, I pay both halves), etc., and the total that went out for taxes
that year was more than I had earned. Sure, I earned too little to have to pay
*income* taxes, but that did not help when my total tax bill was over 100% of
my income.

I spent another 100% of my income buying medical insurance, and another 100% of
my income paying the deductible on that medical insurance. Her family spent
almost nothing on either expense, because her husband's employer provides
excellent insurance. But because I still had a little money saved from when I
was working full-time, I don't qualify for free government health care ... I
have to pay every cent of the insurance and every cent of the bills from either
my income or my savings.

Where I really got screwed was that the year they were giving the big tax
breaks was the one year of my adult life that I earned so little that I didn't
pay the IRS anything, so I didn't get the "refund of prior overpayments" (as it
was being called) even though I *paid* those "prior overpayments".

When income taxes first started, only the top 1% paid income taxes. Now you've
got people below the poverty level paying income taxes. Something's wrong
there. I say we determine what income provides a decent standard of living
(renting enough bedrooms so the boy and girl don't have to share a room or Mom
has to sleep on the couch, the types and quantities of foods recommended by the
government dietitians, day care for the kids, proper medical care, etc.) and
make that the Standard Deduction on which no income taxes are paid. Because
there is absolutely no reason that someone should be going to the charity food
closet every month because the money she needs to feed her kids is being taken
from her paycheck to feed the government.

And if keeping those low-income families self-sufficient instead of begging for
charity means raising the taxes on the top 1% back to the 90% rate of the 1950s
and 60s, oh well. If some movie star can't scrape by on 10% of his $25M
paycheck, he's doing something wrong, because there are a lot of people
scraping by on 1% of that 10%.


--
Finished 9/24/04 - Quilt Show
WIP: Fireman's Prayer (#2), Amid Amish Life, Angel of Autumn, Calif Sampler,
Holiday Snowglobe

Paralegal - Writer - Editor - Researcher
http://hometown.aol.com/kmc528/KMC.html

C Cordell wrote:
None of the taxes you quote are that high here, so I don't either. My
health insurance is $120 per month, I just paid for a renewal of my car
license ysterday and the ownereship tax came to $3.45 a month, property
tax runs about $130 per month on half of a 320 acre farm, and I've never
heard of anybody being taxed for owning a lawn mower. Maybe your mother
should check into cheaper insurance, drive a smaller car or move to a
more reasonable area?

It is never wise to look in one's own yard and extrapolate to
everywhere/everyone else.

If I had to retire and was alone (no spouse), I would get about $750 a
month in social security. Try living on that.

Dianne

I would get about $750 a
month in social security. Try living on that.


According to our government, any disabled person who earns $750 a month is
"self-supporting" and does not need disability benefits any more.

I agree with you that it's impossible to live on, but the government does not.
--
Finished 9/24/04 - Quilt Show
WIP: Fireman's Prayer (#2), Amid Amish Life, Angel of Autumn, Calif Sampler,
Holiday Snowglobe

Paralegal - Writer - Editor - Researcher
http://hometown.aol.com/kmc528/KMC.html

Gee, you could maybe find a studio apt. for that around here, heat
included if you're lucky.

Meredith

Karen C - California wrote:
I would get about $750 a
month in social security. Try living on that.



According to our government, any disabled person who earns $750 a month is
"self-supporting" and does not need disability benefits any more.

I agree with you that it's impossible to live on, but the government does not.

I'll agree with most others on here. Your mother must live in an
outrageous location. My parents (who aren't quite elderly but are no
longer employed) pay $866 per year in property tax on their home &
double lot. There is no personal property tax on their car, truck, &
van--just annual license fee which is modest and based on age, purchase
price, and weight of each vehicle. Dog license is $5/year. The lawn
mower tax for personal use is a new one to me--that has never be
assessed anywhere I have lived. There is a tax on lawn mowers owned for
business purposes here but that is different.

I will agree that health insurance and the costs for everything the
insurance doesn't cover are way too high.

Gary V. Deutschmann, Sr. wrote:
For most elderly, their health insurance alone costs 300 to 600 per
month, property taxes in suburbia on their home 250 per month,
personal property taxes on their car vary depending upon the car, but
are often over 20 bucks a month. In some states, another 3 bucks per
month for their lawn mower, 2 bucks for their pet, etc.

On a fixed income of $500.00 per month, they don't have enough to pay
the taxes, much less buy food and essentials for living.

Taxes alone for my 80 year old mother are 82% of her fixed income, and
I'll bet they are very close to that percentage for your elderly
parents as well!

--
Brenda